As Next improves its full-year profit guidance following a strong first half performance driven by its directory business, Drapers takes a look at what city analysts make of the retailer’s second quarter results.
Singer Capital Markets analyst Mark Photiades said Next directory’s business was likely to have benefitted from the recent spell of poor weather.
“The retail business has also seen a very encouraging pick-up in Q2,” he said.
Investec analyst Bethany Hocking added that Next’s 4.5% sales growth was “significantly” better than expectations and that the trading statement is further evidence that Next is outperforming its peers and gaining market share.
“We expect the shares to go higher today,” she said. “We will be increasing forecasts and happily remain buyers.
“What is also encouraging is that the beat comes from both retail and directory, not just the latter, which should go some way to silence bears’ fears regarding the store estate.”
Independent analyst Nick Bubb said Next’s statement was positive particularly in light of a low growth UK economy.
“It has been a difficult three months in fashion retailing, but Next Retail was only down by 2.3% like-for-like, despite the poor summer weather, and Next Directory again came up trumps, with 13.3% sales growth,” he said.
“The only disappointment is that there is no colour or detail in the statement, with no Simon Wolfson comments about the impact of the Olympics on retailing or the outlook for the UK economy.”